MARQUEST WEEKLY COMMENTARY – APRIL 20, 2015

MARQUEST WEEKLY COMMENTARY – APRIL 20, 2015

Last week the TSX was down 0.2 percent. WTI Crude Oil was up 7.9 percent, the biggest weekly advance in more than four years. NYMEX natural gas futures were up 4.9 percent. The Marquest Monthly Pay Fund A units closed at $4.45 compared to $4.47 the previous week. The Bank of Canada kept the key interest rate unchanged. Canada’s inflation rate was 1.2 percent in March. No one is surprised that food prices (up 3.8 percent) are the main reason. This inflation report indicated some economic growth and made a future interest rate cut by the Bank of Canada less likely.

Significant contributors in the Fund last week were Arc Resources (up 11.4 percent), Bank of Nova Scotia (up 2.3 percent) and Royal Bank (up 1.5 percent). Arc reacted to the strength in the commodity prices. With regard to the banks, this is the second consecutive week that they have been significant contributors to performance as they recover from price weakness at the beginning of the year.

Last week, the MSCI World Index was down 0.6 percent. The C$ was up 2.7 percent against the US$. The Marquest Global Balanced Fund A units closed at $18.43 compared with $18.93 the previous week. The currency move impacted the fund negatively. Weak economic data combined with weaker than expected corporate earnings announcements caused the US dollar and the US markets to decline.

Laggards were Tata Motors (down 8.0 percent), Home Depot (down 5.8 percent) and Whirlpool (down 6.2 percent). There was no specific bad news; they participated in a general market selloff.

At Tata Motors, JLR (Jaguar Land Rover) reported 16 percent year over year growth in March. Global wholesale sales were 50,093 units. The growth was driven by Land Rover with strong performance of the new Discovery Sport. Jaguar sales are expected to pick up with the introduction of Jaguar XE.

Raymond James downgraded Whirlpool based on concerns about competition in North America and weak growth expectations in Latin America. Falling raw materials are expected to benefit Whirlpool later in the year. Whirlpool is the biggest maker of household appliances in the world.

Home Depot’s share price was weak but the company expects continued momentum in the Pro space and omni-channel and services. Management believes HD can benefit from the growing number of aging Baby Boomers (with a lot of disposable income) that utilize Pros and HD Services more while Millennials focus more on digital and mobile commerce. HD is seeing “items in the basket” growing for the first time in years.